Many small businesses periodically have difficulties with cash flow. When your outgo exceeds your income on a regular basis, you may find that your company is on a downward slope to a quick demise. However, even businesses with continual cash flow problems can turn the situation around by implementing some organizational strategies. Here are some tips to help you get started.
Monitor Cash Flow
Keeping a close eye on your cash flow on a regular basis lessens the possibility that you’ll be caught unprepared in a crisis. Maintain monthly, quarterly, and yearly cash flow statements that track income and expenses in all the facets of your business. Focus on maintaining healthy cash flow even more intensely than on increasing profits, as profits can be nullified by unpaid receivables, while positive cash flow keeps your company afloat.
Healthy cash flow depends upon a steady influx of funds. To boost sales, come up with a new ad campaign, a redesigned logo, or a retooled product. Once your products or services are the best they can be, perhaps you should consider raising prices. Most businesses nudge their prices up from time to time.
Regularly evaluate and compare your suppliers to be sure you are getting the best values in price and service for your expenditures. For major equipment and property needs, consider leasing instead of buying. Leasing ties up less capital and allows you to upgrade to new technology when contracts expire. Studies show that using cutting-edge technology exponentially increases productivity and also makes for more committed employees.
Rather than wait until month’s end to bill for goods or services, as soon as products are delivered or jobs are complete, send out invoices immediately. Additionally, offer discounts if clients pay early to encourage prompt payment. If you have a problem with late-paying clients affecting your cash flow, consider an invoice clearing service that offers you quick cash for outstanding invoices.
For more advice on business cash flow, get in touch with Legacy Capital Lending.